Technical Trading Versus Fundamental Trading

December 21, 2016 9:15AM CST

Supply and demand side fundamentals are supposed to give commodity futures markets their intermediate to longer term trends, up or down. Sure the fundamentals of the market are important, but the technical trading is more important. I’m not suggesting that you should completely ignore the fundamentals but I will say that you should do what the chart is telling you to do right now…in or out. The technicals are real and they are happening right now. Fundamentals are usually “old” news and the technicals can change fast. Some traders make the mistake of thinking that the market has got it wrong because the fundamentals do not support the market’s current behavior. Don’t try to fight the market. Let the chart tell you what to do in the market and understand this, the biggest traders in the market are trend following funds. Trend following funds do not care about what the fundamentals say as much as what the charts say. When certain levels on a chart are achieved or violated that is when the big money starts to get in or get out. Don’t fight it because the fundamentals, in your opinion, don’t agree with market action. Technical analysis is more important to having success as a trader than fundamental analysis. I will end now with a recommendation for traders that use Candlesticks. Try Heikin-Ashi. Heikin-Ashi is a better version of Candlesticks. It doesn’t just give you each new day’s open, high, low and close. Heikin-Ashi candles calculate averages of previous days and therefore the trend is clearer or more defined. Heikin Ashi is slower to show reversals and therefore help us avoid making mistakes in trading against a longer term trend.

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